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Pursuant to a congressional request, GAO reviewed the Veterans Benefits Administration's (VBA) computer systems and services modernization project, focusing on: (1) the status of the VBA business process redesign and its service improvement goals; (2) the validity of VBA cost estimates; (3) the VBA contention that existing computer equipment failures are frequent and cause service problems; and (4) the Department of Veterans Affairs' (VA) and the Office of Management and Budget's (OMB) agreement to redirect the VBA modernization effort.

GAO found that: (1) VBA proceeded with deployment plans for computer equipment before it determined how that equipment would improve delivery of benefit services; (2) VBA lacks specific operation goals and performance measures and cannot validate its life-cycle cost estimates because of mistakes and omissions; (3) it cannot substantiate the VBA contention that it needed certain computer equipment immediately to alleviate service problems caused by its aging equipment; (4) the VA and OMB agreement directs VA to establish service improvement goals for VBA business processes, make funding contingent on the demonstration of improved service to veterans and restrain spending under the initial contract; (5) although the agreement also calls for the update of the modernization's economic assessment in cooperation with OMB, a wholly new economic analysis based on refined requirements would provide VBA with more accurate and complete information; and (6) under the agreement, VA will improve departmental oversight by strengthening the chief information resources officer's role in prioritization, review, approval, and control of major automation projects.

Recommendation for Executive Action

Status: Closed - Not Implemented

Comments: In July 1994, GAO updated the Department's progress in implementing the June 1993 agreement with OMB to redirect VBA's modernization effort. GAO found that VBA would not conduct a new assessment and that the agreed upon update had not been completed. VA plans to update cost information after it awards the second of its three planned procurements. Further, the Department states that because it did not concur in GAO's conclusion, it was not responding to it. On the basis of this action, GAO believes that this recommendation should be closed.

Recommendation: To help ensure the success and financial integrity of the VBA modernization effort, the Secretary of Veterans Affairs should direct VBA to replace the existing economic assessment with a new economic analysis that is accurate, complete, and fully supported with auditable documentation.